The Rogak Report: 15 May 2009 ** No Fault - Provider EUOs **
ARBITRATOR REJECTS INSURER'S EUO NO-SHOW DEFENSE DUE TO FAILURE TO JUSTIFY NEED FOR EUO
In the Matter of the Arbitration between Y&W Acupuncture PLLC and State Farm Insurance Company, AAA Case No. 412009005206, AAA Assessment No. 17 991 05107 09 (Philip R. Wolf, arbitrator)
Edited by Lawrence N. Rogak
There were several issues presented in this arbitration, but one of them was whether State Farm validly denied benefits to this acupuncturist based on the failure of the provider to appear for EUOs demanded by State Farm.
"Applicant is seeking reimbursement in the amount of $7,950.88 for acupuncture treatment rendered from February 13, 2008 through June 27, 2008.... Assignor was the driver of a motor vehicle which was involved in an accident on February 4, 2008. Assignor presented to Applicant on February 13, 2008 with complaints of neck pain, lower back pain, bilateral shoulder pain, and bilateral knee pain."
"Traditional Chinese Medicine examination revealed a tense pulse and Assignor's tongue had a white coating with thin fur. Physical examination yielded positive findings with respect to Assignor's cervical spine, lumbar spine, shoulders and knees. Assignor was diagnosed with Chi and blood stagnation. Acupuncture treatment was recommended."
"An acupuncture re-evaluation was performed on March 4, 2008. Assignor underwent acupuncture treatment from February 13, 2008 through June 27, 2008. Applicant has submitted the acupuncture progress notes for the subject dates of treatment."
"After reviewing the evidence submitted by Applicant, I find that Applicant has submitted sufficient credible evidence to establish a prima facie case of medical necessity for the acupuncture treatment rendered from February 13, 2008 through June 27, 2008."
"Respondent issued timely denials asserting: 'You have failed to comply with your obligation to present a proper proof of claim, as required under 11 N.Y.C.R.R. 65-1.1, by failing to provide the verification, including the examination under oath that we have requested that you attend on May 15, 2008 and June 5, 2008. Therefore, you have failed to satisfy a condition of coverage, and your claim is denied.'"
"As part of its submission, Respondent has submitted EUO scheduling letters dated April 23, 2008 and May 23, 2008. The April 23, 2008 letter sets forth, in part: 'Our records indicate that you have submitted bills for acupuncture for patients who have received physical therapy and chiropractic care for the same condition, at the same location, during the same period. This, combined with the pattern of acupuncture treatment that you purport to render to these patients, raise issues regarding the circumstances under which you are rendering these services, the necessity of these services, and your entitlement to benefits under the Fee Schedule.'"
"Counsel for Applicant asserts that Respondent has failed to establish an objective reasonable basis for requesting the EUO of Applicant. More specifically, counsel for Applicant asserts that Applicant only renders acupuncture services and therefore would have no information regarding any chiropractic treatment and/or physical therapy treatment being received by Assignor. Counsel for Applicant further asserts that any inquiry regarding concurrent care must be made by someone with medical training to determine if the treatment was in fact concurrent and that said determination could be made by a review of Applicant's records and reports without the necessity of conducting an EUO. Counsel for Applicant additionally asserts that Respondent has failed to submit any evidence of an alleged 'pattern of acupuncture treatment' as set forth in the EUO scheduling letters."
"Counsel for Respondent, in its brief, states: 'State Farm had a reasonable basis to request this examination under oath following an investigation conducted by their Special Investigation Unit into the Chun Xian Yu. State Farm's investigation revealed that a significant number of claims submitted by Ms. Yu are for patients who have received physical therapy and chiropractic care for the same condition at the same location, during the same period. This, combined with a pattern of acupuncture treatment purported to be rendered to these patients, raises issues regarding the circumstances under which she is rendering these services, the necessity of these services, and her entitlement to benefits under the fee schedule.'"
"In State Farm Mut. Auto. Ins. Co. v. Mallela, 4 N.Y.3d 313 (2005), the Court of Appeals held that an insurer may require an EUO 'solely for a good Cause.' Pursuant to 11 NYCRR 65-3.5(e), 'when an insurer requires an examination under oath of an applicant to establish proof of claim, such requirement must be based upon the application of objective standards so that there is specific objective justification supporting the use of such examination.' Accordingly, inquiry turns to whether Respondent has established an objective reasonable basis for requesting the EUO of Applicant."
"At the hearing in this matter, Respondent failed to produce a member of the Special Investigation Unit to testify regarding the alleged investigation that had been conducted. In addition, Respondent did not submit an affidavit from a member of the Special Investigation Unit detailing the alleged investigation that was conducted. Respondent has not submitted evidence indicating that Applicant's patients received physical therapy and chiropractic care for the same condition at the same location, during the same period."
"Furthermore, the mere fact that a patient receives physical therapy, chiropractic care, and acupuncture simply raises a defense of concurrent care which must be established by a person with the relevant training and/or educational background to competently assess whether the claims sought payment for treatment which constituted concurrent care. See, Ying Eastern Acupuncture, P.C. v. Global Liberty Insurance, 2008 NY Slip Op 51863U, 20 Misc. 3d 144, (2nd Dept. 2008)."
"In Jean D. Miller, M.D. and State Farm Insurance Company , AAA. Case No. 412008024992 (Arbitrator Horwitz 11/7/08), Arbitrator Horwitz held: 'What State Farm is claiming to be a violation, that is, concurrent care, is neither illegal, fraudulent or improper and not a violation of the Workers Compensation rules. Not cited, but relevant, is the rest of the rule that provides that if concurrent care is established (and established is the critical criteria of the claim), only one payment is made to the provider whose specialty is most relevant to the diagnosis and the one fee is the prorated to the other provider(s).'"
"Respondent has not submitted an affidavit and/or peer review from any one with relevant training and/or educational background to competently assess whether the acupuncture treatment, chiropractic treatment, and physical therapy treatment constituted concurrent care. In fact, Respondent has failed to submit any affidavit from anyone, even a claim representative, stating that the subject bills from the various providers were actually reviewed and appeared to demonstrate evidence of concurrent care."
"In its EUO schedule letter and in counsel's brief, Respondent asserts a 'pattern of acupuncture treatment purported to be rendered to these patients.' However, Respondent has failed to submit any evidence demonstrating a 'pattern.'"
"Based upon the foregoing, and after reviewing the evidence, I find that Respondent has failed to establish an objective reasonable basis for requesting the EUO of Applicant.... Accordingly, I find that Applicant is entitled to reimbursement for the acupuncture treatment rendered from February 13, 2008 through June 27, 2008."
Comment: Conducting EUOs of medical providers seem to be more problematic than EUOs of the injured parties themselves. It certainly seems easier to "justify" an EUO of the "covered person" because he or she has personal knowledge of the facts of the accident and the subjective experience of the alleged injuries, as well as some details regarding the medical treatment. On the other hand, the providers have no personal knowledge of the accident and may, at best, have only partial knowledge regarding treatment if there are other providers involved. Using the EUO as, in effect, a tool to investigate the provider, gets a lot of push-back from AAA as well as the courts.
Insurers may need to fine-tune their strategy in demanding EUOs of providers. For example, if the EUO demand is couched in language which focuses on the details of the treatment provided, in order to "assist" the insurer in "determining the medical necessity" of the treatment (rather than suspicion of fraud, which seldom sits well with courts or arbitrators), then perhaps such a demand would better withstand the scrutiny of arbitrators and judges. Which would mean, of course, that no-show denials could have a higher success rate.